California Enacts Landmark Digital Assets Licensing Law

On October 13, California Governor Gavin Newsom signed AB 39, called the Digital Financial Assets Law (DFAL), to regulate companies engaged in digital asset activities in California. The DFAL is a comprehensive regulatory framework for digital asset companies, including licensing, disclosure, reporting and recordkeeping requirements, establishment of examination and enforcement powers, and other requirements with significant implications for California digital asset companies as well as out-of-state companies that engage in a digital asset business in California. The law requires virtual currency exchanges and other businesses engaged in digital asset activities to take measures to protect consumers. The law becomes effective on July 1, 2025. California simultaneously passed SB 401, which regulates digital asset ATMs.